Unions, government return to court in $28-billion challenge

A decade-long battle to recover $28-billion the Canadian federal government used to help pay down the country’s deficit in 1999 is being heard in the Supreme Court of Canada.

A total of 18 unions and pensioners’ groups are fighting to get back a $28-billion surplus from the public service, RCMP and Canadian Forces pension plans after the government passed legislation that restructured the way the plans were managed. The group claims the government breached the trust of plan members and violated its fiduciary duty.

In October 2010, the Ontario Court of Appeal dismissed the case, but the Supreme Court granted a leave to appeal because of the “national importance” of the case. The case affects more than 700,000 retired and active public servants who belong to one of the country's largest pension plans.

The unions and pensioners want the Supreme Court to acknowledge they have an "equitable" interest in the surplus. They say experts estimate at least 42 per cent of the surplus and interest is how much public servants, RCMP and military contributed to the total amount over the years.

They argue Bill C-78 — the legislation the government passed in 1999 to give it authority to obtain the surplus — didn't "extinguish" employees' claim to a portion of the surplus.

If the unions and retirees succeed, the federal government could find itself with $28-billion added to its national debt.

The government says the accounts in question were "legislated ledgers," which are accounts that contain only monetary information or bookkeeping entries. The government maintains there was no money, bonds, stocks, or any other investment in the accounts. The government says that funds were deposited in the Consolidated Revenue Fund and became public funds for the government's use.